The country posted $1.504 billion balance of payments (BOP) surplus as of end-July, higher than end-June’s $1.441 billion after registering a small excess of $62 million for the month, based on Bangko Sentral ng Pilipinas (BSP) data.
The seven-month BOP surplus is however lower compared to same period last year of $2.207 billion.
The highest cumulative BOP surplus position for this year so far was $1.596 billion last May.
The BSP said Monday, Aug. 19, that the BOP surplus in July was due to inflows or net income from the BSP’s overseas investments. The government’s net foreign currency deposits also contributed to the surplus position.
As to the year-to-date BOP surplus, the central bank attributed the cumulative BOP position to the following: the narrowing trade in goods deficit; the continued net inflows from personal remittances; net foreign direct investment; trade in services; net foreign borrowings by the National Government; and net foreign portfolio investments.
Basically, the BOP is a summary of the economic transactions of a country with the rest of the world for a specific period. It is an accounting of the economic dealings between residents and non-residents. A BOP surplus position means there are more exports or inflows than imports or outflows, while a deficit position is the opposite.
The BSP on Monday also reported the final gross international reserves (GIR) tally of $106.7 billion as of end-July versus $105.2 billion in end-June. The BSP releases two GIR data in a month, a preliminary and a final GIR. The preliminary GIR which was reported on Aug. 8 was $105.6 billion.
The BSP noted that the GIR level is more than “adequate external liquidity buffer” which is equivalent to 7.9 months’ worth of imports of goods and payments of services and primary income. It is also about 6.1 times the country’s short-term external debt based on original maturity and 3.8 times based on residual maturity.
Last June 13, the BSP’s policy-making arm, the Monetary Board, revised the BOP forecasts for 2024 and 2025 on the back of the changing external accounts, the expected global economic recovery, and the country’s lower inflation.
For 2024, the BSP forecasts a higher BOP surplus of $1.6 billion versus its March estimate of only $700 million.
For 2025, the BSP is projecting $1.5 billion BOP surplus, an improvement from its previous estimate of $500 million deficit.
As for the GIR, the BSP also forecasts the US dollar reserves to close at $104 billion by the end of 2024. For 2025, the GIR is expected to be higher at $105 billion.